Market Outlook: Today there is a sharp decline in Vodafone-Idea shares in intra-day.
Market Outlook: Today (January 11) there is a sharp decline in the shares of Vodafone-Idea in intra-day. It is understood to be the reaction of investors to the company’s decision regarding government stake. In a BSE filing, the company has informed that its board has approved the conversion of outstanding AGR (Adjusted Gross Revenue) and spectrum auction installations interest into equity. With this decision, the government will have about 36 percent stake in telecom company Voda-Idea. Today, the trend of investors is looking negative regarding this and it slipped up to 17 percent in intra-day on NSE. On Monday, its shares closed at a price of Rs 14.75.
Government will have majority stake
Voda-Idea has informed in the filing that in the meeting of the company’s board of directors on Monday (January 10), the proposal to convert the interest related to spectrum auction installations and AGR dues into equity has been approved. According to the BSE filing, the Net Present Value (NPV) of this interest is about Rs 16,000 crore. After converting the dues into equity, it is believed that the government will have 35.8 percent stake in the outstanding shares of the company and the promoters of Vodafone Group will hold 28.5 percent and Aditya Birla Group will hold 17.8 percent i.e. the government’s telecom company Vodafone- There will be a majority stake in Idea.
Bharti Airtel has chosen the second option
Private sector telecom giant Bharti Airtel had informed a few days ago about important decisions regarding AGR dues and interest due on spectrum. Airtel had informed in a regulatory filing that it would not exercise the option to convert the arrears on AGR and spectrum interest into equity. The option to convert the dues into equity has been given by the central government to the telecom sector companies under the Reform Package, on which the company informed about its decision last week.